The long term goal of the proposed research is to elucidate mechanisms that specify positional information and pattern development. Our focus is on the developmental compartments of Drosophila, specifically the role and function of the anterior/posterior (A/P) compartment borders. During the past granting periods, we identified several genes that are expressed in compartment-specific patterns, including hedgehog (hh) in all posterior compartment cells and cubitus interruptus (ci) in all anterior compartment cells, and we established that these patterns of expression are linked by an elegant regulatory relationship: engrailed (en), expressed only in posterior compartment cells, positively regulates hh and negatively regulates ci; Hh protein, secreted by posterior compartment cells positively regulates ci in anterior compartment cells. Through these actions, the asymmetry of en expression at the compartment border initiates a cascade of genetic responses that patterns both compartments and thus implicates the compartment boder as the key organizer. Specific objectives proposed to further elucidate this important regulatory pathway are: (1) To investigate the regulatory functions that are responsible for patterning en expression (2) To characterize the mechanism through which en regulates hh expression (3) To identify and characterize the receptor that mediates the hedgehog signal (4) To characterize the mechanism responsible for the compartment-specific expression of ci (5) To establish the identity of the active form of the Ci protein and to determine its enzymatic function.